Volkswagen AG chairman Hans Dieter Poetsch and other top executives are in talks about significant bonus cuts to help resolve a dispute over management pay in the midst of the emissions-cheating scandal.
Poetsch agreed to retroactively reduce a payout stemming from his previous job as chief financial officer, according to Lower Saxony prime minister Stephan Weil, who sits on Volkswagen’s supervisory board. The board will discuss cutting flexible executive compensation at its April 22 meeting, Weil said.
“The board and executives agree that management pay needs to set an example in light of the company’s current situation,” Weil, speaking to Lower Saxony lawmakers, cited Volkswagen as saying. That would result in a “significant reduction in variable pay.”
The embattled German carmaker has been under increasing pressure over executive bonuses after labor unions and Lower Saxony, the company’s second-largest shareholder, opposed generous remuneration because of the need to cushion the financial hit from the scandal. Poetsch was targeted for scrutiny because he was promised a payment of about 10 million euros ($11.29 million) last year as compensation for leaving the higher-paid CFO post.
Volkswagen shares rose the most in more than a month, trading up 4.3% to 112.05 euros Wednesday morning in Frankfurt. The stock is down 31% since the scandal, shedding more than 16 billion euros ($18.07 billion) from the company’s market value.
Volkswagen, which is still grappling with fixing 11 million tainted cars, has one of the highest-paid executive ranks in the auto industry. In 2014, its nine-member management board earned a total of nearly 70 million euros ($79.04 million), including 54 million euros ($60.97 million) in variable compensation. That was nearly double the 37 million euros ($41.78 million) that Daimler AG paid its nine top executives, including bonuses for record earnings last year. BMW AG’s nine management-board members made 35.5 million euros ($40.08 million) last year.
Volkswagen faces billions of euros in costs for rigging emissions tests and has said the 6.7 billion euros ($7.57 billion) set aside in the third quarter last year won’t be enough. A spokesman for the Wolfsburg-based company declined to comment.
CEO Matthias Mueller updated management board members at their weekly meeting Tuesday on the plans following a gathering of the company’s top supervisory board panel on Monday. At a session last week, some executives had opposed the elimination of their bonuses for last year to help stem the financial fallout from VW’s diesel-manipulation scandal, according to people familiar with the situation, who asked not to be named because the talks were private.
By Christoph Rauwald